I agree about excessive upgrading being bad for morale.
But with CX I see teenagers boarding a near full plane then being guided to business class when I as a CX Diamond member sit in economy. This is why rules are necessary to make the system function. I fly every second week tracking around East Asia. So I limit higher class bookings for very special events otherwise my US$25-30K annual ticket bill would become uncontrollable.

So why not a bit of order to reward the very loyal? I am not suggesting the N American upgrade on all flights, just say 2 long haul and two less than 1500 mile flight coupons as a means to bring some motivation to the CX FF system

I see that TG has upgrade coupons, so I think there is a demand for this reward in Asia too. Thai Gold annually gets one round-trip complimentary upgrade to the next class of service using a paid ticket.